Bankers say Congress holds key to banking pot

The expected federal guidance on how banks should deal with legal marijuana businesses is little more than a misguided effort to “change water into wine,” the state’s largest banking association says.

“The only real solution is an act of Congress, which isn’t likely in the near future, though needed,” Colorado Bankers Association president and CEO Don Childears writes in an opinion piece submitted to The Denver Post.

Bankers have been increasingly wary of offering services to marijuana businesses — most will not and those who do are very quiet about it — because federal laws still list marijuana as an illegal drug in the same manner as heroine and cocaine.

In a separate four-page position paper, CBA outlines the variety of issues bankers face in doing business with marijuana shops.

Federal authorities have indicated that “yellow-light” guidance was likely forthcoming from the U.S. Department of Justice, which prosecutes drug violations, and the U.S. Department of the Treasury, under whose authority many banking regulators reside.
Legal-marijuana advocates were bolstered by U.S. Attorney General Eric Holder’s enunciations at the University of Virginia in January that policy adjustments were being discussed to deal with the unintended clash between state and federal laws: piles of cash laying around because marijuana businesses cannot bank.

Guidance “cannot change the fact that marijuana is against federal law,” CBA says in the position paper. “It cannot change water into wine.”

But any guidance is simply not enough to move bankers from their leery seats, Childears said in the opinion piece, which is as-yet published.

“Bankers face criminal and civil penalties should they fail to act on their suspicions” of reporting financial transactions from known-illegal businesses under federal law, such as marijuana shops, Childears writes. “These laws simply can’t be swept aside.”

The critical issue, Childears writes, is not a prosecutor’s choice to look the other way, but rather the regulators who wield a lot more authority over banking. Regulators by law must follow the Controlled Substances Act — even if Holder and company won’t prosecute violators.

“Regulators can impose various civil money penalties, cease and desist orders, fines and can ban bankers from their careers for life, should they violate federal law,” Childears writes.

That means bankers aren’t likely — though some have expressed an interest — to bank marijuana businesses no matter what policy shift occurs from Holder’s forthcoming statement.

A number of “green lights” to get bankers to change their minds would require detailed guidance from regulators themselves — several agencies oversee banking — with “a high probability of no regulatory action against a bank,” Childears writes.

“Banking services would greatly resolve state regulation and taxation issues, serve customers and businesses in legal transactions and help public safety,” Childears writes, referring to the need to bank the marijuana industry. “Only Congress can make that happen.”

Emilie Rusch covers retail and commercial real estate for The Post. A Wisconsin native and Mizzou graduate, she moved to Colorado in 2012. Before that, she worked at a small daily newspaper in South Dakota. It's the one with Mount Rushmore.